Updated July 2026

Major shifts to how employees finance their education are here, and employers need to know. Federal legislation changes affect not only how employees borrow to fund their education, but also how employers should adapt education benefit programs to remain competitive, inclusive, and impactful.

In this on-demand webinar, Challenges Facing Employees Financing Education: What Employers Need to Know, EdAssist by Bright Horizons experts Stacey MacPhetres and Michelle Clifton decoded the complex policy changes, explored real-world implications, and shared actionable strategies for the future of education financing.

So now that these changes are in place, it’s time to take action.

Why are there changes in financing education?

Over 1.8 trillion dollars in student loan debt hangs over U.S. workers. That burden has gotten a lot heavier with student loan default hitting record high and more confusing for many.

Federal policy updates from the 2025 Tax Reconciliation Bill, also known as the One Big Beautiful Bill (OBBB), and related regulations brought significant changes on July 1, 2026 in three key areas: tuition and workforce education, student loan borrowing, and student loan repayment.

What’s changing for tuition and workforce education?

For tuition and workforce education, here’s what’s changed under the OBBB and what employers need to know:

• The tax-free status for employer-provided tuition and student loan repayment assistance has been made permanent and it’s a game-changer for employee benefit planning.
• The $5,250 tax-free benefit cap (per employee, per year) will be indexed to inflation starting in 2027, making it easier to keep pace with rising education costs. This impacts both tuition assistance and student loan repayment.
• Pell Grants will cover short-term, non-degree training programs, meaning frontline workers and reskilling adults may have expanded access to funding if they qualify. This is a great opportunity for employees who didn’t think about using tuition assistance before, especially when paired with employer support.

These changes create more flexibility for employers to design equitable, future-focused education benefit programs that reach a broader employee population.

What’s changing for student loan borrowing?

Student loan borrowing policies are also changing and here are the implications for employers:

• Undergraduate student borrowing is unchanged, but Parent PLUS loans are reduced. Parent PLUS loans will be capped at $20,000 per year and $65,000 total, reducing family borrowing abilities under federal loan programs. This has a strong impact on the sandwich generation, forcing parents to look at different funding opportunities for education.
• Loan amounts for part-time students will be prorated, limiting access for those balancing work and school. Most students who work full-time fall into this category. Now under the OBBB, employees attending school part-time can only borrow based on their enrolled hours, limiting their borrowing opportunity.
• Grad PLUS loans are eliminated, significantly reducing graduate students’ federal borrowing capacity. Without flexible borrowing options, more employees may be deterred from pursuing graduate school to further their education and skills.
• While Grad PLUS loans are eliminated, other available federal student loan amounts also have new limits. This is an area that has a lot of public concern, specifically around what’s considered a “professional” or “non-professional” program. New limits are set at $100,000 total for non-professional graduate programs, and $200,000 for professional programs.

The definition of “professional and non-professional" degree programs has come under scrutiny recently with a court order resulting in some programs like nursing MSN, and DNP being added to the professional list while the litigation continues. These borrowing changes could create new access barriers for employees and their families, particularly in high-need fields like healthcare where employers are often trying to close skill gaps.

Recent changes to student loan repayment have left many borrowers with questions. Talk with EdAssist about how your organization can provide meaningful support and guidance.

What’s changing for student loan repayment?

Aside from tuition and student loan borrowing, there are also changes coming for student loan repayment. This affects both existing borrowers and new borrowers needing to finance education. Here’s what employers need to know:

For existing student loan borrowers

For existing student loan borrowers, current federal Income-Driven Repayment (IDR) plans, https://www.brighthorizons.com/resources/blog/edassist/save-student-loan-repayment-plan-to-end Pay as You Earn (PAYE), and Income-Contingent Repayment) ICR, will be phased out by July 1, 2028.  While borrowers in the Saving on Valuable Education (SAVE) plan with have 90 days from notification from their loan servicer to select a new repayment plan.

These plans were based on income and family size and offered low payments, and 20-25 year forgiveness. With these changes to student loan repayment, existing borrowers will need to switch to the income based  Repayment Assistance Plan (RAP)modified Income-Replacement Repayment (IBR) plan or a Standard Plan with fixed payments.

This is critical for employers because about 8 million borrowers transitioning from SAVE will have to identify a new repayment plan, which is a high number of employees facing this confusing transition. Many may not be able to afford their new payments.

For new student loan borrowers

For new student loan borrowers, any loans disbursed after July 1, 2026, will have two repayment plans available. If they qualify for a RAP plan, they’ll make monthly payments based on income starting at $10 per month. If not, they need to switch to a Standard Plan with fixed payments with repayment terms ranging from 10 to 25 years, based on total loan balance.

While designed to simplify repayment, these transitions are very confusing if your employees are repaying student loans. This is especially challenging for those navigating multiple loan types, forgiveness options like Public Service Loan Forgiveness (PSLF), and interest accrual changes.

What are the key impacts and opportunities for employers?

With so many changes ahead, employees need employer support for clarity, coaching, and financial support. This is even more critical when access to graduate education becomes harder because the supply of talent can shrink. Here’s what employers should be thinking about now.

Tuition and Workforce Education

• Permanent tax-free status for tuition and student loans provides more flexibility. Employers can reallocate benefits to reach more employees. For example, offer both student loan repayment and tuition assistance.
• Inflation-indexed $5,250 cap allows benefit limit to keep pace with rising education costs. Employers can modernize policies annually with predictable increases.
• Need-based Pell Grants for non-degree programs allows for more funding options for those who qualify. Employers can expand access to upskilling and frontline employees, providing more access and funding options for those who qualify.

  Student Loan Borrowing

• Grad PLUS eliminated reduces graduate student overall federal borrowing capacity. Employers can consider updating tuition programs because if you have employees needing graduate study to enhance their roles, they may take longer without financing options.
• Loan proration for part-time enrollment limits borrowing capacity. Employers can review their tuition programs for what roles or programs they offer because employees will rely more on employer benefits.
• Changing graduate borrowing limits for professional vs non-professional designation. Employers can provide coaching or support with their education benefits to help employees identify funding opportunities with lower graduate borrowing limits. This greatly reduces graduate student borrowing limits and opens funding gaps for some high-need roles.
• For dependent borrowing, Parent PLUS loan limits reduced to $20,000/year per student, $65,000 total. Employers can consider offering dependent borrowing as a benefit. This new reduced parent borrowing ability adds additional burden to families financing higher education.

  Employee Student Loan Repayment

• SAVE repayment plan elimination, the elimination of other existing income-based repayment plans and introduction of repayment assistance plan (RAP) from 2026–2028. Employers can consider offering student loan coaching and support. These changes are creating a tremendous amount of confusion with student loans, the second greatest source of debt behind mortgages. With 1.8 trillion in U.S. student loan debt, employees are struggling with their loans and not saving towards retirement plans.

Not sure whether your education benefits program needs to change? Talk with an EdAssist expert to assess the impact of recent legislation and identify opportunities to better support your workforce.

What employers in the healthcare industry need to know

For employers in healthcare, the elimination of Grad Plus, the initial professional and non-professional definition changes and limited Parent PLUS borrowing may have an even bigger impact on employees looking to fund education. High cost, high need fields may face much tighter federal borrowing limits, potentially requiring employer tuition benefits, private loans, and program selection strategies (including part-time or lower-cost options).

While these initial changes seem discouraging it’s important to note that the non-professional fields are still professional roles.  The good news is that litigation continues with the list of disciplines expanding, now including more healthcare and nursing professions.

What employers should be aware of is that borrowing may not be as accessible as it used to be, which might be noticeable when graduate programs in healthcare are in great demand and there’s a barrier to obtaining them. , This is an opportunity to consider how programs can be adjusted to fill those critical roles and talent pipeline in the future.

What are the key areas of focus for HR and benefits leaders?

Now that we’ve reviewed the key impacts and opportunities for employers from the changing legislation, the next step is for employers to evaluate their education benefit programs. Here are key considerations for employers to support learning pathways.

Modernize education benefits to reflect new realities

• Tax-free assistance provides opportunity to update tuition assistance programs to cover non-degree and short-term credential programs, especially for frontline employees with potential Pell Grant eligibility.
• Adjust graduate study policies in response tonew loan limits and borrowing rules[SM1]  with professional and non-professional programs in flux Focus support on degrees aligned with organizational goals and future workforce needs.
• Plan for annual updates to benefit caps tied to inflation starting in 2027. This may require planning to keep pace with education costs.

Support employees with coaching and tools [SM2]

• Help employees navigate repayment changes with confidence. Federal student loan policies continue to evolve, leaving many borrowers unsure about payment options, eligibility requirements, and next steps. Providing access to student loan and financial coaching gives employees a trusted resource to understand their choices, avoid costly mistakes, and make more informed decisions.
• Use coaching to drive better outcomes across the employee journey. Whether employees are managing student loan repayment, evaluating education pathways, or preparing to build new skills, personalized coaching helps them maximize available benefits and make decisions that support both their career goals and financial well-being. Offering coaching is a practical, high-impact way to increase benefit utilization and employee support.

Leverage new flexibility in tax-free benefits

• With the permanent tax-free provision now including both tuition and loan repayment support, employers can combine benefits under a single umbrella. This creates more holistic support without added tax complexity.
• Employers using EdAssist can manage both programs within the combined cap to streamline delivery and communication.

Expand Support to Employees’ Families

• Dependent support through College Coach can help employees plan and finance dependent education, particularly as Parent PLUS loan caps tighten. As you think about adapting your program to best serve your employees, here’s another consideration.
• The newly introduced “Trump Accounts” will function like long-term savings accounts for dependents. Employers can contribute to these accounts to help families build future education savings.

3 Steps for Employers to Take Proactive Action Now

Now that these changes are in effect, employers have an opportunity to help employees navigate a more complex education financing landscape. Rising education costs, new borrowing restrictions, and evolving repayment requirements will affect how employees pay for education and manage student debt. Here are three actions employers should take now:

Here are three steps to take now:

1. Assess your current education assistance program. Does your current tuition assistance, student loan repayment, and workforce development programs align with today’s employee needs and support your organization’s talent goals? The changes to federal financing make employer-sponsored education benefits very valuable to employees.
2. Help employees understand what these changes mean. Many employees are unsure how the new rules may affect their borrowing, repayment options, and future education plans. Clear communication, educational resources, and coaching can reduce confusion and help employees make informed decisions.
3. Partner with experts. As employees navigate changing repayment requirements and education financing options, personalized guidance can make a meaningful difference. Providers like EdAssist bring the tools, policy insights, and coaching resources you need to evolve your benefits with confidence.

With education costs rising and borrowing access narrowing, the role of the employer in education financing has never been more critical. By staying informed and adapting benefits to align with the new policy landscape, organizations can ensure continued access, equity, and workforce development in the years ahead.

Let EdAssist help. From tuition assistance and student loan repayment programs to personalized coaching and education guidance, EdAssist helps organizations build benefits strategies that support both employee success and business goals.

Connect with an EdAssist expert to discuss your workforce needs and education benefits strategy.